According to an analyst Chen Jiazuo, China's rare earth prices will generally fall throughout 2013.

Investments in rare earth grew as China is attempting to gain more negotiating power over pricing, which caused prices to fluctuate.

China's domestic consumption grew 7% MoM.

China has executed export quotas for rare earth since 2006, and prices had been rising. But the global financial crisis which occurred in 2008 pushed down rare earth prices again.

In order to stimulate economy, China began to implement stimulus policies, causing rare earth prices to climb in 2010, and were pushed up to a near-year-high in July 2011 by speculation capital.

But due to high prices, sluggish global economy and low demand, rare earth price index plunged from 15, to 5-6, and had been falling since then.

Chen Jiazuo reported China will continue to implement exploration quantity and separated products production plan for rare earth in 2013, with total volumes flat with 2012, and rare earth prices will fall further, which will given incentive to downstream consumption. China's rare earth consumption in 2013 should reach 90,000 mt, up 7% MoM; global total rare earth consumption is expected to be 130,000 mt.

China has 23% of rare earth in global total volume, and supplies 90% of rare earth to the world. Due to high price and expensive costs, US, Europe and Japan began to seek for other suppliers outside China, and actively explore substitute products for rare earth.

The most influential explorations are the Mountain Pass mine by Molycop and Weld mine by Lynas